There was no let-up in US farm markets yesterday.
Chicago wheat prices jumping more then 7% in May delivery and more then 21.7% in March delivery.
For the week, wheat has risen 40.1%, corn is up 17% and soybeans have added 5%.
Mounting worries that the Russian invasion into Ukraine (both countries combined account for nearly a third of all global wheat exports) could lead to a short-term worldwide shortage, in fact, are beacaming even more real.
That sent wheat prices soaring to limit-up gains again, and CBOT contracts went limit-up for the fourth consecutive session.
Particularly, March SRW closed up 21.78% at $12.89, just 45 cents under the all time high from March of ’08.
May SRW closed up 7.08% at $11.34.
May HRW was up 6.98%, allotting 60 cents by the bell.
May HRS futures were still up 5.67%, allotting 60 cents by the bell.
New crop spring wheat prices went home 22 to 28 cents higher and over the $10/bu mark.
Corn and soybean gains were more muted, but they also moved higher.
Particularly, corn due May 2022 hit its trading limit during the session, i.e. +35 cents, thus posting its highest level since December 2012 and rose around 3.14%, while soybeans pickked up only 0.29% by the close.
Soy meal stayed in upside gaining 1.29%, but still faded to $3.70 to $5.40/ton gains by the bell.
Soy oil, in contrast, gave back triple digits on the day, closing the session 1.4% lower.
In energy market, oil prices jumped again on this morning after ending steady a day earlier.
Prices, however, yesterday swung in a $10 range but settled lower for the first time in four sessions, as investors were focused on the revival of the Iran nuclear deal, which is expected to boost Iranian oil exports and ease tight global supplies. But global stocks fell for now.
More oil supplies could be added from a coordinated release of 60 million barrels of oil reserves by developed nations.
Japan said on this morning it plans to release 7.5 million barrels of oil, though that is only a small fraction of its demand.
In this context, Brent crude futures for May rose as high as $114.23 a barrel and by 07:55 GMT were up 73 cents, or 0.7%, at $111.19.
The contract fell 2.2% on Thursday.
U.S. West Texas Intermediate for April rose $1.21, or 1.1%, to $108.88 after touching a high of $112.84 earlier in the session.
The contract fell 2.65% on Thursday.
Thus, crude oil prices are set to post their strongest weekly gains since the middle of 2020, with WTI up 19% and Brent 13% after hitting their highest in a decade this week.
Dhar expects Brent to average $110 a barrel in the second and third quarters of this year but said “the risk is that prices rise above forecast in the short term”, adding that it is plausible Brent futures could reach $150.
In the freight market, the Baltic Exchange’s dry bulk sea freight index fell on Thursday, as a dip in capesize rates outweighed gains in the panamax and supramax segments.
The overall index, which factors in rates for capesize, panamax, supramax and handysize shipping vessels, indeed, fell 33 points to 2,104 points.
Particularly, the capesize index dropped 201 points, or 10.9%, to 1,639 points.
Average daily earnings for capesizes, which typically transport 150,000-tonne cargoes such as iron ore and coal, decreased $1,662 to $13,596.
The panamax index, in contrast, was up 65 points, at 2,699 points.
Average daily earnings for panamaxes, which usually carry coal or grain cargoes of about 60,000 to 70,000 tonnes, increased $590 to $24,293.
Among smaller vessels, the supramax index rose 49 points to 2,520 points.
In equities markets, U.S. stock indexes Thursday posted moderate losses as a slump in technology stocks led the overall market lower.
Thursday’s U.S. economic data were mixed.
On the bearish side, the Feb ISM services index unexpectedly fell -3.4 to a 1-year low of 56.5, weaker than expectations of a +1.2 point increase to 61.1.
Also, Q4 unit labor costs were unexpectedly revised upward to +0.9%, showing higher labor costs than expectations of no change at 0.3%.
On the positive side, weekly initial unemployment claims fell -18,000 to 215,000, showing a stronger labor market than expectations of 225,000.
Also, Jan factory orders rose +1.4% m/m, stronger than expectations of +0.7% m/m.
Fed Chair Powell said that “would recommend and support a one quarter of 1% increase” of the federal funds rate at the March FOMC meeting, or more, if inflation doesn’t come down.
Also, Powell warned that the fighting in Ukraine is likely to further magnify the high inflation troubling world economies.
Meantime, the yield on the 10-year Treasury slipped to 1.85% from 1.86% late Wednesday.
Thus, on Wall Street the S&P 500 fell 23.05 points to 4,363.49.
The Dow slid 0.3% to 33,794.66.
The Nasdaq dropped 214.07 points to 13,537.94.
Smaller company stocks also lost ground.
The Russell 2000 index fell 26.46 points, or 1.3%, to 2,032.41.
Meantime, Asian equities and the euro slumped on this morning after news of a fire near a Ukraine nuclear facility following fighting with Russian forces heightened investor fears about the escalating conflict and sent oil prices higher.
Russian forces, indeed, gained ground, shelling Europe’s largest nuclear power plant and sparking a fire.
Fortunatly, authorities said the blaze was safely extinguished with no victims as the Zaporizhzhia plant’s reactors were protected by robust containment structures and have been safely shut down immediatly.
In this context, MSCI’s broadest index of Asia-Pacific shares ex-Japan tumbled as much as 1.6% to 585.5, the lowest level since November 2020, taking the year-to-date losses to 7%.
Tokyo’s Nikkei 225 index fell 2.2% to 25,985.47 while the Hang Seng in Hong Kong slipped 2.6% to 21,876.28.
In Seoul, the Kospi declined 1.2% to 2,713.43.
The Shanghai Composite index lost 1% to 3,447.65.
Australia’s S&P/ASX 200 shed 0.6% to 7,119.80.
On the weather side, wetter weather is on its way to the central U.S. between today and Monday, per the latest 72-hour cumulative precipitation map from NOAA.
Northern Iowa, southern Minnesota and Wisconsin are likely to see the most moisture during this time.
NOAA’s 8-to-14-day outlook predicts colder-than-normal returning to the Midwest and Plains between March 10 and March 16, with more seasonally wet weather likely for the central U.S.
On the demand side, weekly FAS export sales data showed 485,118 MT of old crop corn was sold during the week that ended 2/24.
That was a 7-week low and below the range of expectations.
Corn export shipments fell 18% lower week-over-week but stayed 7% above the prior four-week average.
Shipments, indeed, were +1 MMT for the 8th consecutive week with the 1.55 MMT shipped bringing the season’s total to 25.77 MMT.
That still trails last season’s pace by 2.5%.
New crop business came in at 223k MT, which was in line with estimates.
USDA had 1.9 MMT on the books for 22/23 as of 2/24.
As for sorghum, the weekly report showed 101,994 MT were sold for 21/22 delivery, with no new crop business.
China is still the main buyer.
Accumulated milo commitments sat at 6.667 MMT as of 2/24.
As for soybean, data showed soybean bookings were 857,029 MT for old crop and 1.386 MMT for new crop.
For the old crop sales, that was inline with expectations, while new crop was above the range of estimates.
USDA also reported 750,961 MT of shipments.
That was down 40% from last week at a 23-week low.
Accumulated shipments reached 40.776 MMT as of 2/24.
For the products, USDA also reported 95,351 MT of soymeal was booked during the week that ended 2/24.
That was just below the expected range.
The week’s soymeal exports were a 25-week low of 143,005 MT.
For soybean oil, FAS data showed 6,588 MT were booked and 13,657 MT was shipped.
That left the season’s BO commitments at 565,098 MT as of 2/24.
As for wheat, data had 299,967 MT of wheat, sold during the week that ended 2/24.
That was down 42% from the week prior, but was up 36% from the same week last year.
New crop wheat sales came in at 69.8k MT.
USDA reported 364,776 MT were exported during the same week, which was a 6-week low and down 11% from the same week last year and 15% below the prior four-week average
Accumulated wheat shipments reached 14.15 MMT as of 2/24, with 18.28 MMT of total commitments.
Meantime, private exporters reported to the USDA, sales of 132,000 metric tons of soybeans for delivery to China.
Of the total, 66,000 metric tons is for delivery during the 2021/2022 marketing year and 66,000 metric tons is for delivery during the 2022/2023 marketing year.
Also, they reported have sold 337,000 metric tons of corn for delivery to unknown destinations during the 2021/2022 marketing year.
Meantime, US President Joe Biden’s administration is studying whether waiving biofuel blending mandates could help offset a surge in prices for key food ingredients like corn and soyoil, two sources familiar with the matter said.
In this context, corn basis bids were steady to mixed across the central U.S., moving as much as 5 cents higher at an Illinois processor and as much as 15 cents lower at an Ohio river terminal.
Soybean basis bids dropped 2 to 15 cents lower at four Midwestern processors and shifted 2 to 10 cents lower at three interior river terminals.
The funds were net buyers yesterday for 25,000 lots of corn, 6,000 lots of soybeans and 12,500 lots of wheat.
From South America, ANDA, an association representing fertilizer companies in Brazil, said on Thursday that local fertilizer stocks should last for three more months amid a major supply chain bottleneck related to Russia’s invasion of Ukraine and Western sanctions on Belarus, an important producer.
ANDA’s forecast, which it said was based on reports from market players, comes a day after Brazil’s Agriculture Minister Tereza Cristina Dias said stocks should last until October.
The association said in a statement that private companies are still able to transact with each other, but noted that sanctions on banks are affecting their ability to pay for produce. It also mentioned logistic disruptions in the Black Sea region, adding the market is currently looking for potential solutions.
Meantime, governmental data from Brazil shows the country exported 6.27 MMT of soybeans in February, which was a year-over-year increase of 136% and could reach at 11.7 million mt in March, according to ANEC.
Also, Brazil exported 670.000 t of corn last month, trending slightly below year-ago levels.
Argentina’s government said on Thursday it would set up a mechanism to control domestic wheat prices and temper food inflation, a move that comes with global prices of the grain hitting 14-year highs.
The government, which was already limiting exports to contain food prices, said it had agreed with flour mills and exporters to set up a “trust” that would keep down local prices.
“This mechanism responds to the need to decouple prices to protect the domestic market in a global context of war and with the international price of wheat high and sustained,” the ministry of production said in a statement.
Argentina is a major exporter of wheat, as well as being the no. 1 global exporter of processed soy and no. 2 for corn. The 2021/22 wheat harvest is estimated at a record 22.1 million tonnes.
In the domestic Argentina market, the grain closed on Wednesday at an average of 32,103 pesos ($298) per tonne, 19% higher than just a week ago.
The price mechanism would remain in place until the end of January 2024 and would focus on prices of domestic sales of wheat flour and dry pasta, the ministry said.
“This policy contemplates transferring 800,000 tonnes of wheat to the domestic market to guarantee supply and achieve price stabilization of these key products,” it added.
Argentina’s government has previously limited wheat exports from the 2021/22 harvest to 14.5 million tonnes.
According to official data, exporters have already declared foreign sales of 13.6 million tonnes.
While the measure was agreed with mills and exporters, the South American country’s farmers appear not to have been included and have opposed proposals for such a mechanism.
Last week the Buenos Aires grains exchange rejected ideas of price control measures, which it described as a “negative stimulus” for production.
Meantime, the rains in Argentina are welcome as the Buenos Aires Stock Exchange revised up its estimate for soybean production to 42 million tonnes and that of corn to 51 million tonnes.
In Europe, situation is very dangerous on the markets, with resulting in unprecedented price variations.
European grain prices, indeed, started a new bullish movement.
The war in Ukraine continues to completely unbalance the market with Ukrainian and Russian origins now absent from almost all international business for an indefinite period.
Importers are thus quickly adjusting their hedging strategy and will have to find alternative suppliers.
Demand for physical wheat in close delivery is unprecedented.
Thus Algeria is once again turning towards the French origin.
French wheat exports totalled 189.000 t through two weeks, led by China.
Egypt, likely will have to draw on its reserves, as the last tenders were canceled.
Meantime, it becomes almost impossible to display physical prices as they can vary from one minute to another.
The sudden withdrawal of Ukrainian maize has also caused numerous supply problems in Europe.
Beyond the halt in the availability of resources from Russia and Ukraine, the question arises for Ukrainian farmers as to whether they will be able or no to plant their spring crops, which would impact global balances in grains, including throughout the next season.
Rapeseed, on its part, once again ended in scattered order after a particularly volatile session.
In this context, non-commercial market participants raised their net long position in Euronext’s milling wheat futures and options in the week to Feb. 25, data published by Euronext showed on Wednesday.
Particularly, non-commercial participants, which include investment funds and financial institutions, raised their net long position to 167,212 contracts from 134,160 a week earlier, the data showed.
Commercial participants similarly increased their net short position to 176,724 contracts from 142,722 a week earlier.
Commercials’ short positions accounted for 68.8% of the total short position, while commercial long positions accounted for 38.3% of total long positions.
Non-commercial short positions represented 31.2% of total short positions, while non-commercial net long positions accounted for 61.7% of the total longs.
In Euronext’s rapeseed futures and options, non-commercial market participants reduced their net long position to 3,171 contracts from 5,315 a week earlier.
Commercial participants reduced their net short position in rapeseed to 5,786 contracts from 6,482 a week earlier.
From the Black Sea basin, it has become clear the Port of Odessa is part of the strategic focus of Russia.
All exports from Russia and Ukraine have ground to a standstill and only Romania is loading vessels in the Black Sea.
Damage to infrastructure is difficult to ascertain but the damage will have a meaningful impact on price after the fighting.
Meantime, extra customs checks by Bulgaria are slowing grain vessel loadings in what companies fear is an attempt to halt exports in response to the conflict in Ukraine, a producers group said on Thursday.
Traders say that Bulgaria is among European Union countries seeing extra export demand as merchants rush to replace grain they had planned to ship from Ukraine and Russia, two of the world’s biggest suppliers.
“At the moment, not officially, but by oral instructions, Bulgaria is breaching the EU rights for free movement of goods,” Radoslav Hristov, head of the National Association of Grain Producers, told Reuters.
Hristov said a cargo ship due to load wheat for Portugal is not being allowed to dock at the Black Sea port of Burgas because customs authorities were carrying out document checks.
The customs office denied that there was a block on exports.
Reports of slowed vessel loading have fuelled market rumours that Bulgaria is planning a grain export ban.
Bulgaria’s agriculture minister, Ivan Ivanov, said late on Wednesday that no such ban was in force and vessels were not being blocked.
Trade policy is a joint EU competence managed by the European Commission.
However, Romania, which like Bulgaria is a large grain exporter through the Black Sea, briefly banned grain exports outside the EU two years ago, when the start of the COVID-19 pandemic sparked food supply concerns.
Meantime, according to the country’s customs service, Ukraine could has exported in February 2022 a record monthly grain volume of around 5.1 Mt.
Most of this volume goes to corn exports which amounted to 3 .8 Mt.
On the Russian side, analysts are starting to revise their grain export estimates downwards, as the outlook for a recovery in activity remains uncertain.
On this wake, U.S. agricultural commodities trader Archer-Daniels-Midland Co is “evaluating its current investments” in Russia and “will announce any decisions at the appropriate time,” ADM said in an emailed statement on Wednesday.
ADM’s small footprint in Russia includes an arm of its WILD flavorings business and a 50% stake in Aston Foods and Food Ingredients, a sweeteners and starches business.
Rival agribusiness Bunge Ltd said in a statement that it is operating in Russia in compliance with all sanctions, but declined further comment on any divestment of its facilities there.
From the Middle Kingdom, China’s Dalian Commodity Exchange will raise margin requirements for some soymeal , soyoil and corn starch futures contracts to 12% from the current 9% from March 9, it said in a statement on Thursday.
The bourse will also adjust transaction fees for some liquefied natural gas, iron ore, coking coal and coke futures contract from March 8.
From South East Asia, India’s sunflower oil imports tumbled 54% between January and February amid the ongoing turmoil in the Black Sea region.
Russia and Ukraine supply more than 90% of India’s total sunflower oil imports.
From Australia, Australia exported 2,762,751 tonnes of wheat and 6667t of durum totalling 2,769,418t in January, up 27 per cent from the December total of 2,182,062t, according to the latest export data from the Australian Bureau of Statistics (ABS).
January saw Australia ship 263,569t of wheat and 1002t of durum in containers, and 2,499,182t of wheat and 5665t of durum go out in bulk.
China was Australia’s biggest destination by far for wheat, taking 687,033t, or close to one quarter of the total, followed by Indonesia on 460,790t and The Philippines on 345,133t.
According to Lachstock Consulting, total wheat exports could hit 3 million tonnes (Mt) in February.
Both Newcastle terminals, and one of two Port Kembla terminals, all in New South Wales, and Melbourne look to have been wheat-only shippers in February.
Meantime, logistic remain tight on road freight and freight rates continue to increase.
Eastern Australian port capacity also has a full program for the nearby.
We have seen CBH release 500,000t additional capacity this week which it will offer to the export trade.
However, Astralia cannot make up for the whole shortage of grains.
Meantime, prices of Australia wheat being offered in Asia have climbed to new highs this week.
Australian Premium White wheat was quoted at around $450 a tonne, including cost and freight (C&F), to Southeast Asia, compared with most trades done around $300 to $350 a tonne (C&F) for the crop that was harvested at the end of 2021.
Local markets too, have seen Port Adelaide track wheat was a stand out yesterday, quoted up $15-20/t by the end of the day.
Western Australian FIS values were firmer and eastern Australian lower grade wheat prices continued to strengthen.
Early activity today is also firmer as evidenced by Clear Grain Exchange trading activity.
Barley continues from strength to strength.
SA track values pushed to $360-65/t levels with a strong nearby export program.
Canola markets were relatively unchanged and tad sluggish yesterday after a big week.
However, the issue of getting the grain out the gate remains.
On the international trade scene, Turkey’s state grain board TMO has informed traders it will cut its purchase of wheat in an international tender to about 285,000 tonnes from 370,000 tonnes provisionally awarded on Wednesday because of high prices.
Particularly, TMO indicated it will not confirm provisional purchases made on Wednesday of 75,000 tonnes priced at an estimated $464.90 and $470.00 a tonne delivered ex warehouses and $517.00 a tonne c&f offered for a new import consignment.
This left the highest price in the tender at an estimated $451.80 a tonne for 25,000 tonnes of 13.5% protein wheat already in warehouses in Turkey for delivery to the port of Tekirdag.
In its last purchase on Jan. 18, Turkey bought 335,000 tonnes at the highest price of $351.80 for 13.5% protein wheat also from warehouses in Turkey.
Leading South Korean animal feedmaker Nonghyup Feed Inc. (NOFI) is believed to have purchased an estimated 207,000 tonnes of animal feed corn in an international tender which closed on Thursday.
Meantime, offers for 65,000 tonnes of feed wheat sought were rejected with no purchase made.
The tender had excluded the Black Sea.
The corn was bought in three consignments each of up to 69,000 tonnes.
One consignment for arrival in South Korea around May 20 was bought at an estimated premium of 309 U.S. cents over the Chicago May 2022 corn CK2 contract from trading house CHS.
A second consignment for arrival in South Korea around June 1 was bought at a premium of 353.50 U.S. cents over the Chicago July 2022 corn CN2 contract from trading house Pan Ocean.
A third consignment for arrival in South Korea around June 10 was bought at a premium of 345.50 U.S. cents over the Chicago July 2022 corn CN2 contract from trading house Viterra.
No purchase was reported of a fourth corn consignment also sought in the tender.
Taiwan making a corn purchase of 130,000 tonnes yesterday from the U.S. and Argentina.
Bangladesh is tendering for wheat on 16 March.
Quantity sought is 50,000 MT CIF Liner out Chittagong.
That’s all.
To all of you I wish you a good day.
Author: Sandro F. Puglisi
